Minimum Water Purchase Transfer
Agreement between East Palo Alto
and Mountain View
Alison Kastama
BAWSCA and Regional Liaison, Water
February 28, 2023
Minimum Purchase Transfer
Agreement
• The SFPUC strives to make the use of existing water supplies more efficient and to maintain the guaranteed revenue stream afforded by minimum purchase requirements for certain
customers who have other sources of water supply available to them.
• The Minimum Water Purchase Transfer Agreement, dated May 24, 2022, between two of the Wholesale Customers, the City of East Palo Alto and the City of Mountain View (MV-EPA
Agreement) supports the efforts of the SFPUC.
• Today’s proposed Agreement does not include any increase in the Supply Assurance of 184 Million Gallons per Day (MGD), or other changes in water supply or facilities.
Supply Assurance and
Individual Supply Guarantees
• Supply Assurance: 184 MGD
• The 1984 Settlement Agreement and Master Water Sales Contract created a perpetual “Supply Assurance” of 184 MGD to the Wholesale Customers.
• Individual Supply Guarantee (ISG): A Wholesale Customer’s share of the Supply Assurance
• In turn, the Supply Assurance was used as the basis for Individual Supply Guarantees that were negotiated among 23 of the
Wholesale Customers.
• ISGs are critical for planning purposes:
• They are the basis for Urban Water Management Plans and are used in land use decisions by the planning agencies associated with Wholesale Customers.
Minimum Purchase Requirements
• Four Wholesale Customers with alternative water supply sources are required to purchase a minimum amount of
Regional Water System supply.
- Alameda County Water District - City of Mountain View
7.648 MGD 8.930 MGD
- City of Milpitas - City of Sunnyvale
5.341 MGD 8.930 MGD
Individual Supply Guarantees and
Minimum Annual Purchase Quantities
2017 Mountain View Transfer
of ISG to East Palo Alto
• The very first successful transfer of Individual Supply Guarantee occurred in 2017 with a transfer of 1 MGD of ISG from Mountain View to East Palo Alto.
• East Palo Alto had imposed a moratorium on new development because their existing customers were fully utilizing East Palo Alto’s ISG.
• At the same time, Mountain View had been paying $2.5-3 million annually for imputed sales.
• For the transfer, East Palo Alto agreed to pay Mountain View $5 million. The amount was intended to help offset Mountain View’s Minimum Purchase obligation.
• This transfer highlighted interest in developing new terms for the WSA that would allow a transfer of Minimum Purchase
obligation as part of an ISG transfer.
2021 Amended Water Supply
Agreement & MV-EPA Agreement
• On January 26, 2021, the Commission approved the 2021 Amended and Restated Water Supply Agreement (WSA) which revised Sections 3.04 and 3.07 of the WSA to allow a Minimum Purchase Customer to permanently transfer a portion of its Minimum Annual Purchase Quantity obligation to another
Wholesale Customer when it transfers a portion of its ISG to that Wholesale Customer.
• The MV-EPA Agreement allows a retroactive permanent
transfer of up to 1.0 million gallons per day (MGD) of Mountain View’s Minimum Annual Purchase Quantity to East Palo Alto, under the terms of the 2021 WSA.
MV-EPA Agreement
• Agreement approved by:
• The East Palo Alto City Council, on April 20, 2021
• The Mountain View City Council, on June 22, 2021
• All Other Wholesale Customers during 2021-22
• Mountain View will initially transfer 0.25 MGD of its existing Minimum Annual Purchase Quantity to East Palo Alto, and may, at any time during the term of the MV-EPA Agreement, make three additional transfers of 0.25 MGD.
Delegation of Authority
To accomplish the administrative details of the approved transfer, it is proposed that the Commission authorize the General Manager to amend the WSA to reflect the effect of the Minimum Annual Purchase Quantity Transfer:
• Attachments E, and E-1, pursuant to Section 2.03.C, to reflect the new Minimum Annual Purchase Quantities that Mountain View and East Palo Alto will have once East Palo Alto’s metered water purchases from the SFPUC meet or exceed, for three consecutive years, the Temporary Modified Minimum Annual Purchase Quantity for each 0.25 MGD transfer under the terms of the MV-EPA Agreement, without returning to the Commission.
• The Individual Water Sales Contracts of Mountain View and East Palo Alto to reflect the new Minimum Annual Purchase Quantities that Mountain View and East Palo Alto will have, without returning to the Commission.
Questions?
10 DEPARTMENT Water Enterprise
AGENDA NO.
8 MEETING DATE
February 28, 2023
APPROVAL:
COMMISSION
SECRETARY
Donna Hood
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Approve Minimum Water Purchase Transfer Agreement between the City of East Palo Alto and the City of Mountain View under the terms of the 2021 Amended and Restated Water Supply Agreement and Authorize Related WSA Amendments Regular Calendar
Project Manager: Steve Ritchie
Summary of Proposed
Commission Action:
Approve the Minimum Water Purchase Transfer Agreement, dated May 24, 2022, between the City of East Palo Alto and the City of Mountain View to allow a retroactive permanent transfer of up to 1.0 million gallons per day (MGD) of Mountain View’s Minimum Annual Purchase Quantity to East Palo Alto, following the 2017 permanent transfer of 1.0 MGD of Mountain View’s Individual Supply Guarantee to East Palo Alto, under the terms of the 2021 Amended and Restated Water Supply Agreement between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County (WSA) ; and authorize the General Manager to amend the WSA to reflect the effects of that Minimum Annual Purchase Quantity transfer.
Background: For many years, the San Francisco Public Utilities Commission (SFPUC) has sold water to wholesale water customers in Alameda, San Mateo, and Santa Clara Counties (Wholesale Customers). The Wholesale Customers purchase approximately two-
thirds of the total supply delivered by the SFPUC
Regional Water System. The SFPUC’s retail water customers inside and outside of San Francisco purchase the remainder.
The SFPUC strives to make the use of existing water supplies more efficient and to mai
ntain the guaranteed revenue stream afforded by minimum purchase requirements for certain customers who have other sources of water supply available to them . The Minimum Water Purchase Transfer Agreement dated May 24, 2022, between two of the Wholesale Cu stomers, the City of East Palo Alto and the City of Mountain View (MV-EPA Agreement), and the proposed amendments to the WSA that would effectuate the MV -EPA Agreement, which have been approved by the Wholesale Customers, supports the efforts of the SFPUC. Neither the MV -EPA Agreement nor the WSA amendment include any increase in the 184 MGD “Supply Assurance ” in the WSA , or other changes in water supply or Agreement: Authorize Amendment to the Amended and Restated Water Supply Agreement Commission Meeting Date: February 28, 2023
facilities. They would retroactively transfer a portion of Mountain View’s existing “ Minimum Annual Purchase Quantity” to East Palo Alto , to correspond with the 2017 transfer of a portion of Mountain View’s “Individual Supply Guarantee” to East Palo Alto, as envisioned in the most recent amendment to the WSA approved by the Commission on January 2 6, 2021 by Resolution No. 21- 0009, without impact ing other Wholesale Customers or the SFPUC . The following background lays out the factual basis leading to the MV-EPA Agreement and proposed WSA amendments.
1984 Agreement
The 1984 Settlement Agreement and Master Water Sales Contract between the SFPUC and the Wholesale Customers (1984 Agreement), which expired in 2009, resulted from the settlement of litigation filed against San Francisco by the Wholesale Customers. The Wholesale Customers alleged that they were paying more than their fair share of Regional Water System costs, among other claims. T he 1984 Agreement created a perpetual “Supply Assurance” of 184 MGD to the Wholesale Customers that survived the expiration of the contract. In turn, the Supply Assurance was used as the basis for water allocations now known as Individual Supply Guarantees or “ISGs” that were negotiated among 23 of the Wholesale Customers.
2009 Water Supply Agreement
On April 28, 2009, by Resolution No. 09- 0069, this Commission approved the Water Supply Agreement between San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County (2009 WSA). The 2009 WSA carried forward many components of the 1984 Agreement, including the 184 MGD Supply Assurance.
Among other
changes, the 2009 WSA created a mechanism to transfer the water allocations known as ISGs among Wholesale Customers.
The 2009 WSA included a “minimum purchase requirement” for four Wholesale Custom ers with alternative water supply sources : Alameda County Water District (ACWD) and the Cities of Milpitas, Mountain View, and Sunnyvale (collectively “Minimum Purchase Customers”).
The minimum purchase requirement, which originated in the 1984 Agreement and had previously applied to a larger group of customers, was designed to prevent loss of revenues by requiring these four customers to annually purchase from the SFPUC the minimum volumes of water set forth in 2009 WSA Attachment E.
2017 Mountain View-East Palo Alto ISG Transfer
In 2017, Mountain View transferred 1.0 MGD of its ISG to East Palo Alto in exchange for a one-
time payment of $5 million dollars. At the time,
Mountain View and East Palo Alto were interested in simultaneously transferring 1.0 MGD of Mountain View’s minimum purchase requirement to East Palo Alto, but the 2009 WSA did not include a mechanism to do so without amending the agreement. As a result, the 2017 Mountain View-East Agreement: Authorize Amendment to the Amended and Restated Water Supply Agreement Commission Meeting Date: February 28, 2023
Palo Alto ISG transfer did not alter Mountain View’s obligation to annually purchase a minimum of 8.930 MGD from the SFPUC, as provided in WSA Section 3.07.C and Attachment E, and in Mountain View’s Individual Water Sales Contract with the SFPUC.
2018 Amended Water Supply Agreement
On December 11, 2018, by Resolution No. 18 -0212, this C ommission approved the 2018 Amended and Restated Water Supply Agreement between San Francisco and the Wholesale Customers (2018 WSA), , with subsequent approval by the Wholesale Customers. The 2018 WSA carried forward the minimum purchase requirement in the 2009 WSA.
2021 Amended Water Supply Agreement
On January 26, 2021, by Resolution No. 21-0009, the Commission approved the 2021 Amended and Restated Water Supply Agreement between San Francisco and the Wholesale Customers (2021 WSA, or WSA ). The 2021 WSA included a new mechanism that would allow a Minimum Purchase Customer to permanently transfer a portion of its “Minimum Annual Purchase Quantity” (a newly defined term) to another Wholesale Customer at the same time that it transfers a portion of its ISG to that other Wholesale Customer (2021 WSA sections 3.04, 3.07.C)
. The amendments included
provisions that prevent shifting of costs to other Wholesale Customers not participating in such transfers. The 2021 WSA, which has been approved by the governing bodies of each Wholesale Customer and executed by all parties as of January 2023, will permit simultaneous ISG and Minimum Annual Purchase Quantity transfers if certain requirements are satisfied.
Agreement: Authorize Amendment to the Amended and Restated Water Supply Agreement Commission Meeting Date: February 28, 2023
Description of
Agreement and WSA
Amendment:
2022 MV-EPA Agreement
In conjunction with the Wholesale Customers’ consideration of the 2021 WSA, Mountain View and East Palo Alto proposed that the other Wholesale Customers, as well as the SFPUC, consider and approve the retroactive conversion of Mountain View’s 2017 1.0 MGD ISG transfer to East Palo Alto into a 1.0 MGD ISG transfer that includes a transfer of up to 1.0 MGD of Mountain View’s Minimum Annual Purchase Quantity to East Palo Alto, in
0.25 MGD increments. The East Palo Alto City Council, on April 20, 2021, and the Mountain View City Council, on June 22, 2021, approved the proposed conversion and authorized their respective City Managers to negotiate and execute an agreement for it. The resulting MV -EPA Agreement, dated May 24, 2022, which has now been approved by the other Wholesale Customers along with the proposed WSA amendments necessary to effectuate the MV -
EPA Agreement, includes the following terms and
conditions for the conversion:
a. Mountain View will initially transfer 0.25 MGD o f its existing Minimum Annual Purchase Quantity to East Palo Alto, and may, at any time during the term of the MV -EPA Agreement, make three additional transfers of 0.25 MGD, subject to additional terms and conditions consistent with the WSA that may be negotiated between Mountain View and East Palo Alto and made a part of the MV -EPA Agreement by amendment.
b. For each 0.25 MGD transfer, East Palo Alto will receive a “Temporary Modified Minimum Annual Purchase Quantity ” (a newly defined term in the 2021 WSA) that is equal to East Palo Alto’s average annual quantity of water purchased from the SFPUC for the five most recent non-drought years prior to the 2017 ISG transfer, plus the incremental transfer amount(s).
c. For each 0.25 MGD transfer, Mount ain View will maintain its Minimum Annual Purchase Quantity in effect at that time, and maintain responsibility for paying any associated “Imputed Sales” as defined in the WSA, until East Palo Alto ’s metered water purchases from the SFPUC meet or exceed the associated Temporary Modified Minimum Annual Purchase Quantity for three consecutive years.
d. East Palo Alto will not be required to pay Imputed Sales associated with its Temporary Modified Minimum Annual Purchase Quantity for any 0.25 MGD transfer.
e. For each 0.25 MGD transfer, once East Palo Alto ’s metered water purchases from the SFPUC have met or exceeded the corresponding Temporary Modified Minimum Annual Purchase Quantity for three consecutive years, that 0.25 MGD will become a part of East Palo Alto’s Minimum Annual Purchase Quantity, and Mountain View ’s Minimum Annual Purchase Quantity will be reduced by 0.25 MGD.
Agreement: Authorize Amendment to the Amended and Restated Water Supply Agreement Commission Meeting Date: February 28, 2023
Proposed Amendments to WSA Attachments E, E-1, and Individual Water Sales Contracts
By this Commission action, staff is asking the Commission to delegate to the General Manager its authority under WSA Section 2.03 to amend the WSA in three respects:
(1) To modify WSA Attachment E -1 to reflect the Temporary Modified Minimum Annual Purchase Quantity that East Palo Alto will have for the initial transfer of 0.25 MGD of Mountain View’s Minimum Annual Purchase Quantity to East Palo Alto, as well as any of the three additional
transfers of 0.25 MGD that may take
place in the future under the terms of the MV -EPA Agreement, without returning to the Commission.
(2) To modify WSA Attachment E to reflect the new Minimum Annual Purchase Quantities that Mountain View and East Palo Alto will have once East Palo Alto’s metered water purchases from the SFPUC meet or exceed, for three consecutive years, the Temporary Modified Minimum Annual Purchase Q
uantity for
each 0.25 MGD transfer under the terms of the MV -EPA
Agreement, without returning to the Commission.
(3) To modify the Individual Water Sales Contracts of Mountain View and East Palo Alto to reflect the new Minimum Annual Purchase Quantities that Mountain View and East Palo Alto will have once East Palo Alto’s metered water purchases from the SFPUC meet or exceed, for three consecutive years, the
Temporary Modified Minimum Annual Purchase Quantity for each 0.25 MGD transfer under the terms of the MV-EPA
Agreement, without returning to the Commission.
Result of Inaction: If the proposed a greement between Mountain View and East Palo Alto and the associated amendments to the 2021 WSA are not approved, Mountain View and East Palo Alto will not be able to retroactively transfer a portion of Mountain View’s M inimum Annual P urchase Quantity t o East Palo Alto following the 2017 transfer of a portion of Mountain View’s ISG to East Palo Alto under the terms of the 2009 WSA.
Budget & Costs: The proposed agreement between Mountain View and East Palo Alto and the associated amendments to the WSA will have no financial impact to SFPUC funds or Budget.
Schedule: The proposed agreement between Mountain View and East Palo Alto will take effect following approval by this Commission.
Environmental
Review:
The 2021 WSA amended the WSA to allow a Minimum Purchase Customer to permanently transfer a portion of its “Minimum Annua l Purchase Agreement: Authorize Amendment to the Amended and Restated Water Supply Agreement Commission Meeting Date: February 28, 2023
Quantity” to another Wholesale Customer at the same time that it transfers a portion of its ISG to that other Wholesale Customer. On October 8, 2020, the Planning Department determined the 2021 WSA amendment was not a “project” pursuant to CEQA Guidelines section 15378 because the 2021 WSA amendment would not result in any direct or reasonably foreseeable indirect physical changes to the environment . The current action would implement revisions in the WSA allowed under the 2021 WSA amendments that were determined not a project under CEQA. The Planning Department determination can be found here:
https://sfpuc.sharefile.com/d-s1c453970cdf14d1dacc72da5d1e8f2c5
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
Attachments: 1. Minimum Water Purchase Transfer Agreement between the City of East Palo Alto and the City of Mountain View
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, For many years, the City and County of San Francisco (San Francisco) has sold wholesale water to water supply agencies in Alameda, San Mateo, and Santa Clara Counties (Wholesale Customers), in addition to the retail water customers it serves in San Francisco; and WHEREAS, In 1984, San Francisco and the Wholesale Customers entered into the “Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County” (1984 Agreement), which created a perp etual “Supply Assurance” to the Wholesale Customers of 184 million gallons per day (MGD); and WHEREAS, In April 2003, water supply agencies in Alameda, San Mateo, and Santa Clara Counties established the Bay Area Water Supply and Conservation Agency (BAWSCA), as authorized by Water Code Section 81300 et seq.; and
WHEREAS, On April 28, 2009, by Resolution No. 09- 0069, the Commission approved the Water Supply Agreement between San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County (2009 WSA ), which carried forward many components of the 1984 Agreement, including the 184 MGD Supply Assurance, which was used as the basis for the Wholesale Custom ers’ water allocations now known as Individual Supply Guarantees (ISGs); and
WHEREAS, The 2009 WSA created a mechanism for the Wholesale Customers to transfer portions of their ISGs among themselves, and included a “minimum purchase requirement” for four W holesale Customers with alternative water supply sources (Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale, collectively “Minimum Purchase Customers”); and
WHEREAS, In 2017, Mountain View transferred 1.0 MGD of its ISG to East Palo Alto in exchange for a one -time payment of $5 million dollars, and at the time, Mountain View and East Palo Alto were interested in simultaneously transferring 1.0 MGD of Mountain View’s minimum purchase requirement to East Palo Alto, but the 2009 WSA did not include a mechanism to do so without amending the agreement; and
WHEREAS, On December 11, 2018, by Resolution No. 18- 0212, the Commission approved the 2018 Amended and Restated Water Supply Agreement between San Francisco and the Wholesale Customers (2018 WSA), which carried forward the minimum purchase requirement in the 2009 WSA; and
WHEREAS, On January 26, 2021, by Resolution No. 21-0009, the Commission approved the 2021 Amended and Restated Water Supply Agreement between San Francisco and the Wholesale Customers (2021 WSA, or WSA), which included a new mechanism that would allow a Minimum Purchase Customer to permanently transfer a portion of its “Minimum Annual Purchase Quantity” to another Wholesale Customer at the same time that it transfers a portion of its ISG to that other Wholesale Customer; and
WHEREAS, In conjunction with the Wholesale Customers’ consideration of the 2021 WSA, Mountain View and East Palo Alto proposed that the other Wholesale Customers, as well as San Francisco, consider and approve the retroactive conversion of Mountain View’s 2017 1.0 MGD ISG transfer to East Palo Alto into a 1.0 MGD ISG transfer that includes a transfer of up to 1.0 MGD of Mountain View’s Minimum Annual Purchase Quantity to East Palo Alto, in 0.25 M GD increments; and
WHEREAS, BAWSCA and the Wholesale Customers have approved the Minimum Water Purchase Transfer Agreement, dated May 24, 2022, between the City of East Palo Alto and the City of
Mountain View for that retroactive conversion (MV-EPA Agreement), and the proposed amendments to the WSA that would effectuate the MV-EPA Agreement; and WHEREAS, The MV-EPA Agreement and proposed amendments to the WSA do not include any increase in the Supply Assurance, or other changes in water supply or facilities; they align with the intent of the 2021 WSA amendments, which encourage simultaneous
ISG and Minimum Annual Purchase Quantity transfers among the Wholesale Customers, in order to make the
use of existing wate r supplies more efficient and to maintain the guaranteed revenue stream afforded by the minimum purchase requirements for certain customers who have other sources of water supply available to them; and
WHEREAS, The Commission may by
resolution delegate its authority under Section 2.03
of the WSA to amend the WSA, its attachments, and the Individual Water Sales Contracts between San Francisco and the Wholesale Customers to the General Manager of the SFPUC; and
WHEREAS,
This action
does not constitute a “project” under the California Environmental Quality Act Guidelines Section 15378(a) because there would be no physical change in the environment; now, therefore, be it
R
ESOLVED, That the Commission approves the attached Minimum Water Purchase Transfer Agreement, dated May 24, 2022, between the City of East Palo Alto and the City of Mountain View; and be it further
RESOLVED, That the Commission delegates to the General Manager its authority under WSA Section 2.03 to amend Attachments E-1 and E of the 2021 Amended and Restated Water Supply Agreement between San Francisco and the Wholesale Customers, as well as the Individual Water Sales Contracts of Mountain View and East Palo Alto, in accordance with the terms and conditions of the MV-EPA Ag
reement, without returning to Commission.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of February 28, 2023.
Secretary, Public Utilities Commission
EF/1/PSD
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MINIMUM WATER PURCHASE TRANSFER AGREEMENT
BETWEEN THE CITY OF EAST PALO ALTO
AND THE CITY OF MOUNTAIN VIEW
This MINIMUM WATER PURCHASE TRANSFER AGREEMENT (“Agreement”) is entered into on this ____ day of _____________ 2022, by and between the CITY OF MOUNTAIN VIEW, a California charter city and municipal corporation, whose address is 500 Castro Street, P.O. Box 7540, M ountain View, California, 94039 -7540 (hereinafter “Mountain View”), and the CITY OF EAST PALO ALTO, a municipal corporation, whose address is 2415 University Avenue, Second Floor, East Palo Alto, California , 94303 (hereinafter “East Palo Alto”), (Mountain View and East Palo Alto hereinafter collectively “Parties” or individually “Party”).
RECITALS
A. WHEREAS, Mountain View and East Palo Alto purchase drinking water from the San Francisco Regional Water System, under the terms of the Water Supply Agreement between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County , adopted in 2009 and as amended (“Water Supply Agreement”). As part of the Water Supply Agreement, Mountain View and East Pa lo Alto each have an individual supply guarantee (“Supply Guarantee”) , and Mountain View has a Minimum Annual Purchase Quantity (“Minimum Purchase”); and
B. WHEREAS, in 2017, Mountain View transferred one (1.0) million gallons per day (“MGD”) of Mountain View’s Supply Guarantee to East Palo Alto in exchange for a one-time payment of Five Million Dollars ($5,000,000). At the time of the 2017 transfer, the Water Supply Agreement did not allow for transfers of Minimum Purchase among the Wholesale Customers, as defined below. Since that time, an amendment to the Water Supply Agreement has been negotiated that, if approved, will allow future combined transfers of Minimum Purchase and Supply Guarantee between Wholesale Customers that have Supply Guarantees (“2021 Amendment”); and
C. WHEREAS, in conjunction with consideration of the 2021 Amendment, Mountain View and East Palo Alto have proposed that the Parties t o the Water Supply Agreement, Wholesale Customers, and the City and County of San Francisco (“San Francisco”), approve, in advance, conversion of the 2017 Supply Guarantee transfer from Mountain View to East Palo Alto into a Supply Guarantee transfer that includes a Minimum Purchase transfer of up to one (1.0) MGD, in twenty -five hundredths (0.25) MGD increments (“Proposed Conversion”); and
D. WHEREAS, East Palo Alto and Mountain View have approved the Proposed Conversion and authorized their City Manager s to negotiate and execute an agreement DocuSign Envelope ID: E2E65B93-5E7A-4F9B-863E-BBA6D641B9BA 24 May
22-131
EF/1/PSD
703-08-24-21AG 2 of 8
transferring twenty-five hundredths (0.25) MGD of Mountain View’s Minimum Purchase to East Palo Alto; in exchange, Mountain View will provide East Palo Alto with the right of first refusal for drought water transfers conducted, pursuant to Attachment H of the Water Supply Agreement, in the same volume of approved Minimum Purchase transfers.
These actions were approved by the East Palo Alto City Council on April 20, 2021 and by the Mountain View City Council on June 22, 2021; and
E. WHEREAS, this Agreement sets forth the terms and conditions negotiated between Mountain View and East Palo Alto for the Proposed Conversion and initial twenty-five hundredths (0.25) MGD Minimum Purchase transfer. Any future incremental Minimum Purchase transfers beyond twenty -five hundredths (0.25) MGD, up to one (1.0) MGD, will require approval by East Palo Alto and Mountain View, subject to any additional terms and conditions negotiated at that time in accordance with Article B, Secti on 4 , of this Agreement . Nothing in this Agreement obligates East Palo Alto and/or Mountain View to enter into future additional incremental Mini mum Purchase transfers; and
F. WHEREAS, in the event Mountain View engages in a transfer of Supply Guarantee and Minimum Purchase to East Palo Alto beyond the one ( 1.0) MGD contemplated in this Agreement, or any other transfer of Supply Guarantee and Minimum Purchase, the terms of the Water Supply Agreement will apply.
AGREEMENT
ARTICLE A. DEFINITIONS.
As used in this Agreement, the following terms have the following meanings:
1. “Agreement” refers to this Minimum Water Purchase Transfer Agreement, by and between East Palo Alto and Mountain View.
2. “BAWSCA” refers to the Bay Area Water Supply and Conservation Agency.
3. “Imputed Sales ” means payment for water above a Wholesale Customer’s metered water purchases from San Francisco and below: (a) the Minimum Annual Purchase Quantity, as specified in Attachment E of the Water Supply Agreement; or (b) the Temporary Modified Minimum Annual Purchase Quantity, as specified in Attachment E-1 of the Water Supply Agreement.
4. “Individual Supply Guarantee ” and “Supply Guarantee ” refer to each Wholesale Customer’s share of the Wholesale Customers’ Supply Assurance from San Francisco, as shown in Attachment C of the Water Supply Agreement.
DocuSign Envelope ID: E2E65B93-5E7A-4F9B-863E-BBA6D641B9BA EF/1/PSD
703-08-24-21AG 3 of 8
5. “Individual Water Sales Contract ” refers to the contract between each Wholesale Customer and San Francisco contemplated in Section 9.01 of the Water Supply Agreement.
6. “MGD” refers to an average flow rate measured in million gallons per day.
7. “Minimum Annual Purchase Quantity” and “Minimum Purchase” refer to the minimum amount of water that a Wholesale Customer agrees to purchase from San Francisco annually, as specified in Attachment E of the Water Supply Agreement.
8. “San Francisco” refers to the City and County of San Francisco.
9. “Temporary Modified Minimum Annual Purchase Quantity ” and “Temporary Minimum ” refer to the minimum amount of water that a Wholesale Customer agrees to purchase from San Francisco on a temporary basis, as specified in Attachment E-1 of the Water Supply Agreement.
10. “Water Supply Agreement ” refers to the Water Supply Agreement between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County, as may be amended from time to time.
11. “Wholesale Customers” means the twenty-six (26) water customers, identified in Section 1.02 of the Water Supply Agreement, who purchase water from San Francisco pursuant to the Water Supply Agreement.
ARTICLE B. GENERAL PROVISIONS.
1. Term. The terms of this Agreement are as follows:
a. Effectivity. This Agreement shall be effective upon approval by San Francisco and the Wholesale Customers representing at least two -thirds in number and seventy five percent (75%) of the quantity of water delivered by San Francisco to all Wholesale Customers during 2 021 via resolutions adopted by the respective governing bodies.
b. Expiration. This Agreement shall expire concurrent with the Water Supply Agreement, which expires in 2034 unless extended by one (1) or both five (5) year extensions, authorized by Sect ion 2.02.A and Section 2.02.B of the Water Supply Agreement. The term of this Agreement will not continue by virtue of renewal of the Water Supply Agreement pursuant to Section 2.02. C of the Water Supply Agreement unless a written amendment extending the term of this Agreement is agreed to by the Parties at that time and approved by San Francisco and the Wholesale Customers.
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2. Temporary Modified Minimum Annual Purchase Quantities . Upon effectivity of this Agreement, the Bay Area Water Supply and Conser vation Agency (“BAWSCA”) will calculate a Temporary Modified Minimum Annual Purchase Quantity (“Temporary Minimum”) for East Palo Alto that is equal to East Palo Alto’s five (5) year average annual water purchase from San Francisco for the most recent nondrought years prior to the 2017 Individual Supply Guarantee transfer from Mountain View to East Palo Alto, plus increments of twenty-five hundredths (0.25) MGD as follows:
a. Temporary Minimum No. 1 (East Palo Alto’s five (5) year average annual water purchase from San Francisco for the most recent nondrought years prior to the 2017 Individual Supply Guarantee transfer, plus twenty -five hundredths (0.25) MGD incremental transfer): 1.840 MGD + 0.25 MGD = 2.09 MGD.
b. Temporary Minimum No. 2 (prior Temp orary Minimum, plus twenty - five hundredths (0.25) MGD incremental transfer): 2.09 MGD + 0.25 MGD = 2.340 MGD.
c. Temporary Minimum No. 3 (prior Temporary Minimum, plus twenty - five hundredths (0.25) MGD incremental transfer): 2.340 MGD + 0.25 = 2.590 MGD.
d. Temporary Minimum No. 4 (prior Temporary Minimum, plus twenty - five hundredths (0.25) MGD incremental transfer): 2.590 MGD + 0.25 MGD = 2.840 MGD.
The calculations listed in Subsections b. through d. are included for illustrative purposes only. Any additional incremental transfer of the 1.0 MGD Minimum Purchase contemplated by this Agreement is subject to mutual approval as described in Section
4.b.
The Temporary Minimums listed above assume East Palo Alto does not receive any Minimum Purc hase transfer from any other Wholesale Customer or a Minimum Purchase transfer from Mountain View in excess of the one (1.0) MGD that is the subject of this Agreement . In the event East Palo Alto receives a Minimum Purchase transfer from another Wholesale C ustomer, or a Minimum Purchase transfer from Mountain View in excess of the one (1.0) MGD that is the subject of this Agreement, the Temporary Minimums Nos. 2, 3, and 4 listed above are subject to change in accordance with Section
3.04 of the Water Supply Agreement, as amended , and as illustrated in the example included in Exhibit A.
3. Payment of Imputed Sales. East Palo Alto will not be required to pay Imputed Sales associated with any of the Temporary Minimums as set forth in Section 2 above.
Mountain View will maintain responsibility for paying Imputed Sales associated with Mountain View’s Minimum Annual Purchase Quantity (“Minimum Purchase”), as set forth in A ttachment E of the Water Supply Agreement. Attachment E of the Water Supply Agreement will be updated to reflect Minimum Purchase transfers completed DocuSign Envelope ID: E2E65B93-5E7A-4F9B-863E-BBA6D641B9BA EF/1/PSD
703-08-24-21AG 5 of 8
pursuant to this Agreement as described in Section 4.c. below, adjusting East Palo Alto’s and Mountain View’s Minimum Purchases accordingly.
4. Minimum Annual Purchase Quantity Transfers.
a. Initial Transfer . East Palo Alto agrees to accept an initial transfer of twenty-five hundredths (0.25) MGD Minimum Purchase from Mountain View bas ed on the conditions set forth herein.
b. Additional Incremental Transfers . Three (3) additional incremental transfers of twenty -five hundredths (0.25) MGD Minimum Purchase , up to one ( 1.0) MGD, may be mutually approved by Mountain View and East Palo Alto at any time during the duration of this Agreement. Additional terms and conditions consistent with the Water Supply Agreement may be negotiated between Mountain View and East Palo Alto and made part of this Agreement by amendment.
c. Triggers. For all incremental Minimum Purchase transfers pursuant to this Agreement mutually approved by East Palo Alto and Mountain View (initial or subsequent), once East Palo Alto’s metered water purchases from San Francisco meet or exceed the corresponding Temporary Minimum set forth in Article B, Section 2, of this Agreement for three (3) c onsecutive fiscal years, one (1) increment of twenty -five hundredths (0.25) MGD of Mountain View’s Minimum Purchase will be transferred to East Palo Alto.
d. Future Transfers. In the event Mountain View engages in a transfer of Supply Guarantee and Minimum Purchase to East Palo Alto beyond the one (1.0) MGD contemplated in this Agreement, or any other transfer of Supply Guarantee and Minimum Purchase, the terms of the Water Supply Agreement will apply.
5. Drought Transfer Right of First Refusal . In the event that Mountain View proposes to sell or otherwise transfer water pursuant to Attachment H of the Water Supply Agreement, East Palo Alto shall have the right of first refusal to purchase such water. This right of first refusal shall apply to the sa me volume of water as the total approved incremental Minimum Purchase transfer or transfers (initial and/or subsequent), at a price to be negotiated by the Parties.
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ARTICLE C. NOTIFICATIONS.
Mountain View agrees to provide BAWSCA and San Francisco with a copy of this Agreement, and any future amendments to this Agreement, so that BAWSCA and San Francisco may enact the following administrative actions related to this Agreement:
1. Modify At tachment E-1 of the Water Supply Agreement to reflect relevant Temporary Minimum(s) for East Palo Alto, as approved pursuant to this Agreement.
2. Modify Attachment E of the Water Supply Agreement to reflect updates to the Minimum Purchase volumes for Mountain View and East Palo Alto pursuant to the terms of this Agreement.
3. Modify the Individual Sales Contract for Mountain View and East Palo Alto to reflect updates to the Minimum Purchase volumes pursuant to the terms of this Agreement.
4. Track the total volume of Minimum Purchase transferred by the Wholesale Customers.
ARTICLE D. MISCELLANEOUS PROVISIONS.
1. Entire Agreement . This Agreement contains the entire understanding between the Parties with respect to the subject matter herein. Th ere are no representations, agreements, or understandings (whether oral or written) between or among the Parties relating to the subject matter of this Agreement which are not fully expressed herein.
2. Amendments. This Agreement may be amended in writi ng and signed by both Parties.
3. Authority to Execute. The persons executing this Agreement on behalf of the Parties warrant that they are duly authorized to execute this Agreement.
4. Headings. The headings in this Agreement are inserted for conven ience purposes only and shall not affect the terms of this Agreement.
5. Notices. Any notice given under this Agreement shall be in writing and shall be given by delivering the same to such Party in person, by delivering the same to such Party by reputable overnight courier or express service, or by sending the same to such Party by registered or certified mail, return receipt requested, with postage prepaid. The DocuSign Envelope ID: E2E65B93-5E7A-4F9B-863E-BBA6D641B9BA EF/1/PSD
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address(es) of each Party for the giving of notices hereunder are, until changed as hereinafter provided, the following:
To MOUNTAIN VIEW: Public Works Director
City of Mountain View
500 Castro Street
P.O. Box 7540
Mountain View, CA 94039-7540
With a copy to: City Clerk
City of Mountain View
500 Castro Street
P.O. Box 7540
Mountain View, CA 94039-7540
To EAST PALO ALTO: City Manager
City of East Palo Alto
2415 University Avenue, Second Floor
East Palo Alto, CA 94303
With a copy to: Public Works Director
City of East Palo Alto
1960 Tate Street
East Palo Alto, CA 94303
Any notice will be deemed given on the date of delivery, on the date of refusal to accept delivery, or when delivery is first attempted but cannot be made due to a change of address for which no notice was given. A Party may change its notice address(es) at any time by giving written notice of such change to the other Party in the manner provided herein. Notice given by counsel shall be deemed given by the Party represented by such counsel.
6. Applicable Laws and Venue. This Agreement shall be construed and enforced pursuant to the laws of the State of California. Any suit, claim, or legal proceeding of any kind related to this Agreement shall be filed and heard in a court of c ompetent jurisdiction in the County of Santa Clara.
7. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which in the aggregate shall constitute one and the same instrument, and t he Parties agree that signatures on this Agreement shall be sufficient to bind the Parties.
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IN WITNESS WHEREOF, this Minimum Water Purchase Transfer Agreement , dated _________________, 2022, between the City of Mountain View and the City of East Palo Alto, is executed.
“MOUNTAIN VIEW”:
CITY OF MOUNTAIN VIEW,
a California charter city and municipal
corporation
By:
Kimbra McCarthy, City Manager
Attest:
City Clerk
APPROVED AS TO CONTENT:
Public Works Director
FINANCIAL APPROVAL:
Finance and Administrative
Services Director
APPROVED AS TO FORM:
City Attorney
“EAST PALO ALTO”:
CITY OF EAST PALO ALTO,
a California municipal corporation
By:
Patrick Heisinger, Interim City
Manager
Attest:
City Clerk
APPROVED AS TO FORM:
City Attorney
DocuSign Envelope ID: E2E65B93-5E7A-4F9B-863E-BBA6D641B9BA Interim
Sr Asst
May 24
Asst
Exhibit A
Illustrations of a Transfer of a Portion of Minimum Annual Purchase Quantity from Mountain View to East Palo Alto Scenario 3: Transferee Already Subject to Temporary Minimum Annual Purchase Requirement AB C D E2 F = A + D
Line # Wholesale Customer
Pre‐Transfer
Permanent Minimum
Purchase1
5 Previous Non‐
Drought‐Year
Average Usage
Existing Temporary
Modified Minimum
Minimum Purchase
Transfer
Temporary Modified
Minimum Purchase3
(TMMP)
Post‐Transfer
Permanent
Minimum4
1 Transferor Mountain View (1st Trans) 8.930 N/A N/A (0.25) N/A 8.680 2 Transferor Y 3.0 N/A N/A (1.0) N/A 2.0
3 Transferor Mountain View (2nd Trans) 8.680 N/A N/A (0.25) N/A 8.430 4 Transferee East Palo Alto
5 Transfer 1: MV ‐> EPA N/A 1.840 N/A 0.25 2.090 * 0.25 6 Transfer 2: Y ‐> EPA N/A N/A 2.090 * 1.0 3.090 1.25 7 Transfer 3: MV ‐> EPA 1.25 2.890 N/A 0.25 3.140 ** 1.50 Year 0
Pre‐Transfer
Year 1
Transfer 1 Effective
Year 2
1st Year Meeting
Temp Min 1
Year 3
Transfer 2 Effective
Year 4
3rd Year Meeting
Temp Min 1
Year 5
1st Year Meeting
Temp Min 2
Year 6
Year 7
3rd Year Meeting
Temp Min 2
Year 8
Year 9
Transfer 3
Effective
Year 10
1st Year Meeting
Temp Min 3
Year 11
2nd Year Meeting
Temp Min 3
Year 12
3rd Year Meeting
Temp Min 3
Year 13
Transferor Mountain View
8 Permanent Minimum Purchase 8.930 8.930 8.930 8.930 8.930 8.680 8.680 8.680 8.680 8.680 8.680 8.680 8.680 8.430 9 Annual Purchase 7.797 7.797 7.797 7.797 7.797 7.797 7.797 7.797 7.797 7.797 7.797 7.797 7.797 7.797 10 = 8 ‐ 9 Imputed Sales 1.133 1.133 1.133 1.133 1.133 0.883 0.883 0.883 0.883 0.883 0.883 0.883 0.883 0.633 11 = 9 + 10 Total Purchases 8.930 8.930 8.930 8.930 8.930 8.680 8.680 8.680 8.680 8.680 8.680 8.680 8.680 8.430 Transferor Y
12 Permanent Minimum Purchase 3.0 3.0 3.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 13 Annual Purchase 3.0 3.0 3.0 3.0 3.0 2.0 1.8 2.0 2.0 2.0 2.0 2.0 2.0 2.0 14 = 12 ‐ 13 Imputed Sales ‐ ‐ ‐ ‐ ‐ ‐ 0.2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 15 = 13 + 14 Total Purchases 3.0 3.0 3.0 3.0 3.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Transferee East Palo Alto
16 Permanent Minimum Purchase N/A N/A N/A N/A N/A 0.25 0.25 0.25 1.25 1.25 1.25 1.25 1.25 1.50 17 TMMP Not Financially Obligated N/A 2.090 2.090 N/A 5 N/A 5 N/A N/A N/A N/A N/A N/A N/A N/A N/A 18 TMMP Financially Obligated N/A N/A N/A 3.090 3.090 3.090 3.090 3.090 N/A 3.140 3.140 3.140 3.140 N/A 19 Annual Purchase 1.890 1.890 2.090 2.090 2.590 3.090 3.090 3.090 2.590 3.000 3.140 3.140 3.140 3.000 20=17or18‐19 Imputed Sales ‐ ‐ ‐ 1.000 0.500 ‐ ‐ ‐ ‐ 0.140 ‐ ‐ ‐ ‐ 21 = 19 + 20 Total Purchases 1.890 1.890 2.090 3.090 3.090 3.090 3.090 3.090 2.590 3.140 3.140 3.140 3.140 3.000 1 “Minimum Purchase” and "Permanent Minimum Purchase" are used in the tables in this Exhibit A as shorthand references to the term Minimum Annual Purchase Quantity. 2 The Temporary Modified Minimum Purchase for Transfer 1 and Transfer 3 is E = B + D; the Temporary Modified Minimum Purchase for Transfer 2 is E = C + D. (See * and ** below for calculation details.) 3 If a transferee already has a Temporary Modified Minimum Annual Purchase Quantity, the additional Minimum Annual Purchase Quantity from transfer 2 is added to the transferee's existing Temporary Modified Minimum Annual Purchase Quantity, not to the transferee's 5 non-drought-year average usage. 4 Cumulative total, including transfers 1, 2, and 3.
5 Although EPA is assigned a new TMMP (3.090 mgd) due to Transfer 2, the three consecutive non‐drought years requirement associated with the prior TMMP (2.090 mgd) resulting from Transfer 1 still exists.
As a result, EPA is assigned a permanent MP of 0.25 mgd in Year 5 after meeting the prior TMMP in Years 2‐4, based on the example in this illustration.
FY13‐14 1.482
FY12‐13 2.076
FY11‐12 1.945
FY10‐11 1.880
FY09‐10 1.815
** Year 4 2.590
Year 5 3.090
Year 6 3.090
Year 7 3.090
Year 8 2.590
1st Transfer from MV starting FY17‐18 (MV transferred 1mgd ISG to EPA in June 2017)
0.25 mgd
Average FY09‐10 thru FY13‐14
1.840 mgd
EPA's 1st Temporary Modified Minimum Purchase Would Be (MGD)
2.090 mgd = 1.840 + 0.25
3rd Transfer from MV starting Year 9
0.25 mgd
Average Year 4 thru Year 8
2.890 mgd
EPA's 3rd Temporary Modified Minimum Purchase Would Be (MGD)
3.140 mgd = 2.890 + 0.25
* East Palo Alto Actual Purchase (MGD) in Previous Non-Drought Years Exhibit A
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